Millies v. Landamerica Transnation D B Co., 31521-5-III

• Decision Date: 15 January 2015
• Docket Number: No. 31521-5-III,31521-5-III
• Court: Washington Court of Appeals
• Parties: RICHARD J. MILLIES, as a trustee of the Richard J. Millies Trust, and SUSAN P MILLIES, as trustee of the Susan P Millies Trust, Appellants, v. LANDAMERICA TRANSNATION d b a TRANSNATION TITLE INSURANCE COMPANY, a corporation conducting business in Washington, and FALCON, INC, an Idaho corporation conducting business in Washington, Respondents.

RICHARD J. MILLIES, as a trustee of the Richard J. Millies Trust,and SUSAN P MILLIES, as trustee of the Susan P Millies Trust, Appellants, v. LANDAMERICA TRANSNATION d b a TRANSNATION TITLE INSURANCE

COMPANY, a corporation conducting business in Washington, and FALCON,

INC, an Idaho corporation conducting business in Washington, Respondents.

No. 31521-5-III

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE

January 15, 2015

UNPUBLISHED OPINION

FEARING, J. — A jury awarded appellants Richard and Susan Millies nothing. The undisputed facts show, however, that the Millies are owed at least $25,000 by LandAmerica Transnation d/b/a Transnation Title Insurance Company (Transnation). We wish we could award this sum to the Millies, but court rules and legal precedent demand otherwisebecause of the manner in which the case was tried before the jury. We affirm the jury verdict and the trial court's denial of the Millies' posttrial motions.

After obtaining a title commitment from Transnation, Richard and Susan Millies, through a trust, purchased a 75-acrc parcel on Deer Lake and a title insurance policy. After the purchase, the Millies learned Transnation failed to discover a 1955 easement bisecting their property. Transnation accepted responsibility and offered the Millies $25,000 to offset the property's diminished value. The Millies objected and demanded over $100,000. When Transnation rejected the Millies' demand, the Millies filed suit, claiming breach of contract and violation of duties under Washington insurance regulations. Transnation demurred, contending it fulfilled the terms of its contract and violated no duty. The jury agreed with Transnation and awarded the Millies nothing.

Richard and Susan Millies argued before the trial court and now on appeal that the court erred in instructing the jury that fulfillment of a contract is a defense to breach of contract. The Millies also seek judgment as a matter of law or a new trial.

FACTS

Richard and Susan Millies were Department of Defense career professionals residing in Washington, D.C. In 2006, the Millies sought to purchase property in the West on which to build their retirement home. They searched diligently for property that offered privacy, solitude, quietude, security, nature, and scenic views. Privacy was paramount. The Millies rejected properties that had public-rights-of-way bisecting them.

In August 2006, Richard and Susan Millies located a 75-acre parcel, overlooking Deer Lake in Stevens County, which fulfilled their criteria. After retaining ColumbiaTitle Company to research the title, the Millies acquired title insurance from Transnation Title Insurance Company and purchased the property for $250,000. The policy listed no exception for any easement favoring a neighbor.

In September 2006, Richard and Susan Millies learned the adjoining property owner to the north, Darold Sauer, held a 1955 recorded easement over a road bisecting their property. According to the Millies, Sauer intended to widen the road to access a condominium complex he planned on his land. The easement runs across the west-facing slope of the Millies' property, in the middle of the prime view shed where the Millies planned to build their retirement home. Richard Millies complained that the easement and its intended use constitutes "a near complete destruction" of the couple's use and enjoyment of the Deer Lake property. Clerk's Papers (CP) at 338. At the time of trial, another owner had acquired the neighboring property and no condominiums had been built.

After their encounter with Darold Sauer, the Millies contacted Columbia Title Company, the broker for Transnation. Columbia Title Company identified the easement bisecting their property and suggested the couple file a claim. On March 28, 2007, Columbia Title Company wrote Transnation and informed the title insurance company that it discovered an easement not previously disclosed.

On April 24, 2007, Transnation Claims Representative Donna LaRocca contacted the Millies' counsel requesting he file any claim with her and explain what the "Milliessee as a loss to them." CP at 250. On July 16, 2007, the Millies' counsel responded;

[T]he Millies determined they would retire out West on a large parcel with suitable access to recreational opportunities and, importantly, protections for their privacy and quietude. . . . In 2006 they visited several properties in eastern Washington based on a listing of available parcels provided by their real estate agent. However, they decided against even visiting one of the listed parcels when they learned that a public right-of-way bisected the property. They also immediately rejected a second parcel upon arriving at the property and hearing the traffic noise from a nearby public road. In the course of their investigations, the real estate agent increasingly developed an understanding of the Millies' deep respect and regard for the property attributes they sought. Eventually, they discovered the property which forms the subject of this claim—a 73-acre piece with beautiful and dramatic views of Deer Lake, a suitable building site near the top of a ridge and deeded waterfront access privileges. The Millies' dream retirement home vision included the prospects of summer-long visits with their grandchildren in the new house they had planned to have built on the property and enjoying the lake itself and the area's recreational opportunities, peaceably.

CP at 251-52. Counsel concluded his letter: "[F]or all of the injury they have suffered actually and anticipatorily, to an extent which may not be limited, we feel the Millies appropriately peg the value of the claim at 50% of the purchase price, or $125,000.00," CP at 253.

On July 19, 2007, Transnation Claims Representative Donna LaRocca acknowledged receipt of the Millies' claim letter, explained that she would review the facts, evaluate the loss, and respond within 30 days. On August 17, 2007, Donna LaRocca, on behalf of Transnation further acknowledged the Millies' claim and requested additional information. Transnation rejected the 50 percent claimed loss andasserted the policy dictated the measurement of their damages. The insurer claimed, "The standard method for determining the difference in value caused by a title defect such as the subject easement, is to hire an MAI appraiser to conduct a diminution-in-value (DIV) appraisal." CP at 255.

Donna LaRocca's August 17 letter accepted coverage under the title policy. LaRocca wrote to the Millies' counsel:

In light of the fact that the 1955 easement was of record but was not found in the title examination, it does not come under the Standard Exception 3 in Schedule B, and the actual loss or damage suffered by the insured related to the easement, as defined under the policy provisions, is covered under the policy.

. . . Pursuant to those provisions, Transnation Title Insurance Company (TTIC) has a number of options, specifically listed in Section 6 of the Conditions and Stipulations, "Options To Pay Or Otherwise Settle Claims; Termination Of Liability", in order to settle this claim.

Briefly, those options include: 6(a) to pay the amount of insurance; or 6(b)(1) to pay or otherwise settle with parties other than the insured; or 6(b)(ii) to pay the insured for the loss or damage. Based on the information I have at this time, being this is not a total failure of title, 6(a) does not apply. Further, given his future plans for the land, the beneficiary of the easement is unlikely to consider giving up his rights therein, making a resolution under 6(b)(1) unlikely. That leaves 6(b)(ii), compensating them for the loss or damage pursuant to the policy.

Ex. at 2.

On September 18, 2007, Transnation retained Auble, Jolicoeur & Gentry (AJG) to conduct a diminution-in-value appraisal of the Millies' property. Jason J. Kostelecky andBruce Jolicocur appraised the Millies' land on behalf of AJG. At the time, Kostelecky was a trainee, not yet a Certified General Appraiser. The two appraisers certified that the encumbrance reduced the value of the Millies' property by $25,000, by using a matched-pair or comparable analysis. "A matched pair is defined as two sales properties that are similar in all respects, save one." CP at 179. The price differential between the sales of those properties equals the value or cost of the dissimilarity, in this case the easement. This analysis determines the hypothetical value a typical market participant would pay for the land with the encumbrance; it does not take into consideration the loss in value the Millies suffered.

Jason Kostelecky found comparable properties that resembled the Millies' land in location and size. Kostelecky divided those properties into three classes based on size. The first class contained only one parcel and was two to seven acre parcels in size. The property in that class had a value 41.32 percent less on a per acre basis because of the easement running through it. If one only compared this class of parcels to the Millies' land, the easement would reduce the Millies' property by 41.32 percent or $103,300.

The second class of comparable properties ranged from 7 to 15 acres, Jason Kostelecky discovered a parcel encumbered with an easement that sold for a higher price than an adjacent parcel without an easement. Jason Kostelecky considered the increase strange, but, when reaching his overall conclusion of damage to the Millies, he considered that the easement on the one parcel caused no reduction in value. Later,another appraiser discovered the sale of the encumbered parcel was not an arms-length transaction, but a transaction structured to obtain financing.

The third class of comparable properties ranged from 15 to 25 acres. Land in this class lost 33.33 percent of its value on a per acre basis because of a road easement. After averaging or combining the percentage losses in the three classes of parcels, Jason Kostelecky concluded the easement reduced the value of...